Pricing for Profitability in the Information Age

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Companies leave millions of dollars on the table every year through sub-optimal pricing practices. The current abundance of customer data, in the context of increased global competition and the instant information sharing made possible by the internet, requires companies to not only set the right prices, but to continually monitor and refine pricing.

The Berkeley-Haas Pricing program equips managers with proven techniques for assessing, formulating, and monitoring pricing strategies. Participants will learn several powerful principles of pricing, and will explore innovative approaches that take full advantage of the rapid changes brought about by the information age.

Details

"I came away with new insights into strategic pricing, negotiating and customer behavior. I'm going back to the office armed with creative ideas on how to improve our revenue model."- Tram Le, Manager of Pricing, Overstock.com

Upon completion of the UC Berkeley Pricing course, participants will:

Possess a solid understanding of current pricing practices in product and service industries

Understand when and how to apply state-of-the-art frameworks for optimizing pricing decisions

Have mastered the essential techniques for making profitable pricing decisions

Be awarded a certificate of completion by the Haas School of Business, UC Berkeley Center for Executive Education

This hands-on, four-day executive education course equips managers with proven techniques for assessing, formulating, and monitoring pricing strategies. Taught by UC Berkeley faculty and local industry experts, participants will re-examine classic pricing strategies, and will explore inventive approaches that take full advantage of the rapid changes brought about by the information age.

Participants will work in groups and individually to assess the current challenges within their own organizations, and experiment with better approaches to improve their effectiveness.

Pricing Training Topics include:

Economic Value to the Customer

Fighting a Price War

Price Sensitivity Analysis

Demand Forecasting

Price Contract Negotiations

Product Line Pricing, Bundling, and Versioning

Price Customization

Licensing Models

Auctions

Revenue Management

Revenue Models

Pricing Program Methodology:The program engages participants through highly interactive training sessions, enabling you to return to your office and use the concepts and strategies immediately. Sessions include multiple simulations and exercises, peer coaching, peer discussions, lectures, and case studies.

Pricing: Program Schedule

Day 1

Pricing Foundations

Session 1: Introduction and Economic Value to Customers

The Economic Value to the Customer (EVC) is the maximum amount a customer should be willing to pay, assuming that s/he is fully informed about the benefits of the product and the offering of competitors. This session provides several case studies of EVC calculations for various products. By the end of this session, you will be able to complete an EVC analysis for your product(s). This skill enables you to determine the best price for your products (both new and old) and capture the highest profit.

Session 2: How Cost Affects Price

Not all costs matter in determining the optimal, profit-maximizing price. In this session, we will show you which costs are the most relevant for pricing. In addition, you will learn to use a powerful tool that shows the role of relevant costs in setting the best price. This tool can also be used to quantify the likely profit impact of a planned price change.

Sessions 3 and 4: Understanding Customer Pricing Sensitivity

Making profit-maximizing pricing decisions requires that companies understand how their customers respond to changes in price. This session provides a comprehensive treatment of the tools available to managers to rigorously understand how sensitive their customers are to price. You will learn how to use and apply survey methods to gauge price sensitivity, including direct questions and conjoint analysis. You will also find out how to analyze the results from price tests and price experiments. Finally, the session covers how to analyze historical data – often hidden in your own files -- to assess how customers will respond to pricing. Tools will be illustrated with numerous examples, cases, and a short exercise.

Day 2

Value Creation

Sessions 1 and 2: Product Line Pricing and Bundling

Different customers have different propensity to pay. Firms that recognize this fact can add significantly more revenue and profit into their business. Customization requires understanding of how you actually deliver value to the customer and their price sensitivity. Prices can be profitably set along different dimensions, across customers, location, time, quantity, product variations, bundles, and so forth. We will examine the profit-enhancing possibilities of price customization using offering structure, price fences, and price structures.

Session 3: Creating a Pricing Framework

This session will explore how creative pricing and contracting can be used to create value for firms engaged in business to business transactions. In a case study, we will explore how one creative pricing technique, revenue sharing, transformed an industry. More generally, we will explore a variety of creative price-contracting approaches, examining how the approach that should be employed depends on the characteristics of the product/service.

Session 4: Revenue Management Simulation

In this session, you will employ a pricing technique known as “revenue management.” Revenue management is a powerful tool to generate the maximum revenue from a given capacity by intelligently differentiating amongst discrete customer segments, extracting maximal revenue from each. As we will discuss through examples, proper use of revenue management techniques have been critical to the success of companies in many industries. The inability to appropriately respond to competitors’ use of these techniques has bankrupted multi-million dollar companies. Although the stakes will be smaller in our simulation, the winning team will still win a prize.

Day 3

Value Creation

Session 3: Price Contract Negotiation Exercise

How will your contract negotiation influence your profitability? As you negotiate and change details of your contract in order to conclude a deal, you will be changing your profit outcome. In this session, you will learn how to increase the total pie in a B2B channel negotiation and gain a sizable portion of the pie for yourself.

Session 4: Value Creation

A central problem facing firms is the harmonization of prices up and down the supply chain. Pricing errors upstream result in the destruction of value throughout the chain and lower profits for all. Using a hands-on simulation, we compare standard pricing—quoting a wholesale price and then letting downstream decide on quantity—with more sophisticated pricing strategies involving what is known in the economics literature as "two-part tariffs." The simulation will demonstrate that a firm using sophisticated pricing to harmonize its supply chain not only unlocks value, but captures a greater portion of that value as well. The unit concludes with a framework for identifying economic conditions where harmonization is especially beneficial as well as determining appropriate price points.

Day 4

Pricing Tactics

Session 1: Price War Case Study

Avoiding ruinous price competition is obviously essential for a firm's long term competitive success. While making explicit threats and promises with other firms in the same industry violates antitrust laws, it is possible to make implicit threats and promises to improve matters. In this unit, we present an analytic framework for avoiding price competition through leveraging future interactions. We then demonstrate how this is done practically using a case study.

Session 2: Revenue Model Design and Wrap-up

Now that you have learned everything you need to know about pricing, this session will provide you the information you need to manage your overall revenue model. In this session, everything that came before will be put together so that you can leave this program with an ability to determine the optimal pricing strategy for your products and company.

Who Should Attend

This course is targeted to Product Management, Marketing, Pricing, and Finance professionals who are responsible for pricing products and services. This course is ideal for the Executive who has responsibility for pricing an entire product or service line.

" Thanks for an all-around fantastic program! The UC Berkeley Pricing for Profitability class gave me up-to-date, practical tools to guarantee profit maximization, with well-chosen simulations and breakouts that brought the course material to life. "

" I'm so glad I took the UC Berkeley Pricing course. I now understand more about how our company can set pricing to optimize our revenue, and I can speak the same language as the product managers in our organization. I also have more ideas about how to request systems and process changes so we can improve our pricing at Adobe. "

– Katie Hingle, Group Manager, Business Operations, Adobe Systems

" Excellent program! The superb faculty members have great expertise and unique skills for teaching complex issues. What I gained on topics such as EVC and competitive sessions was well worth the time away from the office. "

" The classes, reading material and unique approach to pricing were very insightful. I am already implementing tools I learned into my work. Pricing For Profitability is essential professional development for anyone in marketing, operations, pricing or product management. "

– Reneta Jenik, Marketing Manager, SanDisk

" Pricing for Profitability is an immediate value-add – critical topics such as creative pricing, product line pricing and bundling and price customization are covered by top-notch instructors in a well-paced, engaging program. "

– Thomas Lim, CFO, VP Finance, TigerLogic Corporation

" Pricing for Profitability is an essential course for every leader responsible for the performance of their enterprise, division, or group. This isn't text-book learning; it's a roll up your sleeves, and let's put this to work approach that really helped my ability to translate course learnings into strategy and tactics my firm can deploy. I can't imagine a course yielding a higher ROI than this. "

– Murray Innes, Manager, Mobile Augers &; Research Ltd.

" A must attend for anyone involved in pricing! Taught by passionate, highly qualified faculty, Pricing for Profitability provides relevant information with real-world applications. I definitely got my money's worth and so will Cisco. "

– Shalabh Goel, Product Manager, Cisco

" No one can attend this course and think about pricing methodology the same way again. Whether you are introducing an innovative new technology, fighting a price war, or looking to extract more value from current products, the ideas and constructs taught during this course will be invaluable. With an economy in contraction and customers attempting to cut all costs, companies that are able to effectively evaluate a product's value and price appropriately will be well positioned to survive, if not thrive. "

– James Adams, Product Marketing Engineer Staff, Lam Research

" The instructors at the UC Berkeley CEE Pricing Course were the best - so passionate and excited about teaching and clearly the preeminent experts in their field. The examples they brought to the course were applicable and tangible - using everyday situations that made the concepts easy to grasp. I'm in the process of revamping our business model using what I learned in the course. "